The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.
- Understanding the McKinsey 7-S Model
- Using McKinsey’s 7-S Model in practice
- McKinsey 7-S model example
- Key takeaways:
- Connected Business Frameworks
- Other strategy frameworks
Understanding the McKinsey 7-S Model
Within these interactions are the seven internal elements that McKinsey named, divided into categories, and classed as either “hard” or “soft”.
Hard elements are tangible and easy to identify. As a result, they are targeted for management with various strategies, plans or organizational templates.
- Strategy – detailing how an organization plans to build or maintain a competitive advantage.
- Structure – how the organization is structured from a management and departmental perspective. Common structures include hierarchical, centralized, and autonomous/outsourced.
- Systems – any process commonly found in daily business operations. For example, product development, manufacturing, or distribution.
McKinsey defines soft elements as less tangible and more difficult to describe than hard elements. They are also subject to change as corporate cultures and values evolve.
Let’s now look at the four soft elements:
- Shared values – these are often the core values of an organization that define its culture and the way it does business. Many regard shared values as the foundational building block for the other 6 elements in McKinsey’s model.
- Style – specifically, the management style of company leadership and the way that their behaviors and actions set the standard for other employees.
- Staff – this refers to the number of personnel in the company and their motivation, preparedness, and ability to successfully do their jobs.
- Skills – skills describe the talents of an organization’s staff. Skill level determines the level of achievement in the organization and whether such skills are aligned with its goals.
Using McKinsey’s 7-S Model in practice
To use McKinsey’s model, businesses should:
- Analyze their shared values. Are they consistent with other elements such as structure and strategy? Remember: shared values determine the direction of the rest of the framework.
- Analyze their hard elements. Do they work in harmony or there is discord? What needs to change to bring them back into alignment?
- Consider whether their soft elements support their hard elements. Again, it is important to identify and address any misalignment of goals.
- Make adjustments throughout the process. The act of making frequent and sometimes complicated adjustments will require time and money, but the potential benefit of an aligned and strategic company is worth the expense.
McKinsey 7-S model example
In the final section, let’s analyze each of the seven hard and soft elements in terms of The Coca-Cola Company.
According to its website, Coca-Cola is “evolving its business strategy to become a total beverage company by giving people more of the drinks they want – including low and no-sugar options across a wide array of categories – in more packages sold in more locations.”
In essence, this entails building a portfolio of customer-centric brands to ensure that the company’s beverage range remains relevant and attractive into the future.
The Coca-Cola Company is structured under four geographic segments (Europe, Middle East & Africa (EMEA), Latin America, North America, and Asia Pacific) and two non-geographic segments (Global Ventures and Bottling Investments Group).
The Coca-Cola System enables the company to be a global player and operate on a local scale at the same time.
The system comprises more than 250 bottling partners around the world, but the company does not own nor control all of them.
In any case, bottling partners support the manufacturing, packaging, merchandising, and even marketing of Coca-Cola beverages.
Many work with customers such as supermarkets, convenience stores, amusement parks, and cinemas to institute processes and strategies that are best suited to the local region or country.
Coca-Cola’s core values include leadership, passion, diversity, equity, inclusion, quality, accountability, collaboration, human and workplace rights, and integrity.
These values contribute to an internal culture that helps the company remain globally dominant.
These components include:
- Be the role model – employees should adopt a growth mindset and create an environment where trust and safety are prioritized. They should also be courageous and aim for the correct outcome as opposed to the most comfortable one.
- Set the agenda – this means crafting a bold vision with ambition, communication, and adaptability. Individuals must take inspiration from external sources and ensure all perspectives are heard before decisions are made.
- Help people be their best selves – the best leaders build and develop talent by listening more than they talk and setting an example with irresistible passion.
The Coca-Cola Company offers employees ”the kind of competitive compensation you would expect from a world leader.”
In addition to attractive salaries, the company offers various perks under its Total Rewards Program.
These include medical, dental, and vision plans, supplemental health plans, tax-free accounts, financial programs, and career development opportunities.
The company has a culture of continuous learning where all employees are encouraged to grow both personally and professionally.
Learning program content is provided by several educational and leadership partners, including Cornell University, Harvard University, FranklinCovey, and MindGym.
- The McKinsey 7-S Model argues that there are seven internal elements of a business that need to be aligned for that business to be successful.
- Of the seven internal elements, three are ”hard” elements that are easy to identify and measure. The remaining four are “soft”, in that they are intangible and hard to quantify precisely.
- The McKinsey 7-S Model is an iterative and often resource-intensive process, but the potential benefits of using this model make it a worthy investment.
Connected Business Frameworks
Other strategy frameworks
- Porter’s Five Forces
- Ansoff Matrix
- Blitzscaling Canvas
- Business Analysis Framework
- Business Model Canvas
- Blue Ocean Strategy